Chemical Company of Malaysia Berhad Annual Report 2018

Group Managing Director’s Management Discussion and Analysis Dear Shareholders, I am pleased to present the financial and operational performance of Chemical Company of Malaysia Berhad (CCM or the Group) for the financial year ended 31 December 2018 (FY 2018). FY 2018 marked the beginning of a new chapter for CCM. Following the completion of the de-merger exercise with Duopharma Biotech Berhad (formerly known as CCM Duopharma Biotech Berhad) on 27 December 2017, we exited the Pharmaceuticals business and are now totally focused on our Chemicals and Polymers businesses. We posted an overall strong performance in FY 2018, achieving 6.8% and 250.5% year-on-year growth in revenue and profit before tax respectively. The commendable financial performance was a demonstration of the Group’s solid business fundamentals, enhanced operational efficiencies and effective transformation strategies. As part of our ongoing transformation strategy, we continue to streamline our activities to make the Group leaner and leverage on capacity expansion to make us stronger. Today, we are on the right growth trajectory to further bolster our leading position in the Chemicals and Polymers businesses. OUR BUSINESS AND STRATEGIC TRANSFORMATION Established in 1963, CCM has been playing a key role in enhancing the quality of life for all Malaysians through its development of the nation’s chemical and polymers industries. Today, as a public listed company on the Main Market of Bursa Malaysia Securities Berhad, CCM offers a wide range of products and services to the chemicals and polymers sectors in line with its mission of providing innovative science and technology-based solutions. The Group continues to capitalise on several key strengths to gain its competitive advantage. These include safe and cost-efficient manufacturing processes, strong research and development (R&D) and core technical capabilities, as well as strong branding. In 2015, CCM embarked on a transformational journey to unlock value for its shareholders. To this end, it exited and divested its Fertilizers business in 2016, as well as de-merged its Pharmaceuticals business in 2017. With these initiatives, CCM is today a leaner and fitter entity totally focused on building and growing its core Chemicals and Polymers businesses while strengthening their presence on the domestic and international fronts. For the year in review, we continued our strategic transformation by bringing two major divestment exercises to a close. July 2018 saw the conclusion of the divestment of the non-core assets of the Group, namely our land in Shah Alam and our 8.39% stake in Pangen Biotech Inc (Pangen), a bio pharmaceuticals company. The disposal of 70.93 acres ANNUAL REPORT 2018 16